You have some truth in your comments on notional losses and government policy.

The fact of the matter is that the government should not decide the price of any asset and if it does it have to be completely transparent and accountable. Period. The job of the CAG is to audit the finances using an objective method, so how can it be misusing its office?! By manipulating the price, the big issue isn't so much about loss to the govt, but it is about crony capitalism and selective, abnormal gains to private players who are hand in glove with the govt actors.

It is not correct to say that citizens would not get cheap telephony without setting prices low for cell phone licenses. The licenses have exchanged hands at higher prices, proving otherwise.

What makes you say that big business is not corrupt in India? Its much worse because there isn't enough transparency. I suggest you explore PM adviser Raghuram Rajan's branding of India's crony capitalism and big business + govt corruption nexus as "resource raj"

Paralysis in govt policy is the govt and babudom's fault. In India we tend to blame the messenger (CAG is this case). We can tolerate a couple of year's of paralysis, if it leads to a cleaner, more transparent code of conduct, as well as the rise of strong, well-educated leaders who can execute their office ably and without corruption. The current fear points to the fact that there is too much arbitrary discretion in the system, when every decision should be outcome of an objective process. A govt shouldn't merely be taking decisions but putting good systems in place to take those decisions. The decision has to be less a discretionary choice of the politician or babu, but borne out of solid analysis in the bureaucracy. Paralysis of the current, faulty decision-making process is a good outcome. They need to reform their way of working, processes, etc.

The article ends with a school-boy-essay-type sentence: "institutions, not crowds, should fight corruption". Fine, agreed, but what will you do when those institutions have crumbled? Huh, we expect publications like The Economist to go deeper.

Economist actually says -" Institutions not crowds must be part of India's fight against abuse of power", and you are missing the broader point here. Only a formal institution can run a country and not crowds. Institutions cant be fixed merely by public protests, the change has to come from within the institution. Merely clamouring for change will replace one corrupt institution with another corrupt one... unless you advocate anarchy as a substitute. I think Economist has done a great job in picking this story.

If the premise of your story is right i.e. coalition politics leads to cronyism which then leads to corruption - there is no hope for India. Coalition is what India is- coalition of 26 different mini countries!

Coalitions are not a problem. Its actually better, because the regional leaders are vested in their regions. Central governments have been negligent of local issues in the past. There is no problem with more independence of states and there being the equivalent of 26 mini countries. Look at it as the structure in the US with each of the 50 states deciding their own energy, health care policies, etc or as in the EU with many different countries, but without the problems of actual borders, and a monetary union without a fiscal union.

We, Indians, should be grateful to the far-sighted framers of the Constitution for the unassailable position given to the CAG. I am amazed at the level of corruption in my country - despite independent institutions like the CAG and a press. One can only wonder at what our resourceful politicians and bureaucrats would have accomplished without such impediments.
I am mildly surprised that the resourceful ruling class has not found a way to stymie the CAG as they did with the Election Commissioner many years ago. When the then Election Commissioner proved uncomfortably assertive and independent, the political establishment merely appointed two more election commissioners to assist him - though the Commissioner himself protested that he was underemployed! In one stroke they reduced him to a minority in the Election Commission and ensured that he remained embroiled in litigation for the rest of his term.

Recent anti-graft related moves by members of the civil society like the Anna Hazare-led team & Dr Subramanian Swamy, & also by civil servants like the present CAG provide us with two distinct approaches to combat the problem of public corruption. Given the fact that the Indian Costitution is endowed with a built-in mechanism of self-correction in the form of such institutions as the judiciary, the Election Commission, the CAG, the CVC etc., all that needs to be done is to have a public-spirited person like Dr. Subramanian Swamy to utilise the judicial processes in order to bring to book the perpetrators of the 2G Scam or a have a statutory authority like the present CAG to expose graft-motivated executive decisions consistent with the true spirit of his constitutional mandate. Both of them appear to be tasting success in their endevours. The second approach, institutionalised by Anna & his followers, shows scant regard for the efficacy of the existing system & believes in using the extra-constitutional route by mobilising anti-corruption-driven popular support to force the Government to creat an all-powerful institution of the Lokpal instead. With the recent collapse of the Anna-led agitation, all eyes are fixed on those like the CAG & Dr. Subramanian Swamy to deliver the promised result.

What really is corruption ??
Is it a traditional way of business of all types.Does it meet the criterion of supply and demand ? - Is corruption of this type a result of artificial manoeuvring supply by Governments?
One thing we do know is that most corruption results from public service jobs - Mostly comes from very restrictive practises - such as the banking Industry or getting a job in the railways.
Is this the result of these jobs being heavily protected ? It would seem so - after all Government jobs are much sought after in the East. But more to the point - A government employee can not be sacked, as per the constitution, nor does she/he have to do any work at all.
The story from our new Chief economist, R Raman, is that - These government servants are an expense that every government should do without- it is too much of a government expense - and it is probbly the cause of the crisis in 'The West'. So reduce the red tape whereby most of the Government servants will not be needed.
Sell off the banks and even the railways. Ask why Singapore airways did not want to buy Air India and Indian airlines.ask what Government employees are getting out of these nationalised companies ( including the Federal ministers)
One can only get rid of corruption by reducing Government.
Do not follow the English example -Do not nationalise everything.
R. Reagan once said - The most frighting words in the English language are ' Hello sir - I am from the Government'

corruption is global and has ramifications too intricate and deep-rooted.one agency, that too, appointed by the government on whom the corruption label is being pasted, cannot suffice to do a good job.a few so-called non-corrupt persons cannot clear the corrupt files in the back-log. a true sense of honesty must arise amongst all citizens and a new awakening should be born in their hearts.this country cannot go on with such large-scale corruption for long!

In USA the constitution makers said 'In God we trust'. In India we need to say in Constitution authorities of regulators that we trust. Indians have almost lost trust in politicians.They are out in making money by hook or crook after taking mandate from people they have been voted to power. They have become looters of money which is due to citizens. It is the wisdom of our constitution makers who produced the institution outside the executives and government bodies created the institutions like Chief Election commissioners, Controller of Auditor General and Supreme court and like other independent bodies outside the government and legislature which is going to be harbinger of hopes against our fight against corruption.

The Comptroller Auditor General (CAG), the Election Commission, the Supreme Court and the RBI are one of India's finest government institutions. And that is primarily because the Constitution grants these institutions ample independence from India's Central and State governments.
One can only wish if other government agencies, especially the Central Bureau of Investigation and the Planning Commission, had such constitutional safeguards against political interference.
And lastly, India needs a national-level independent Lokayukta (anti-corruption ombudsman) who can keep a close eye on the government's corrupt intentions.
Credit has to be given to CAG. It not only identified and highlighted various corruption scandals (which otherwise would've gone unnoticed), but also played an instrumental role in bringing the issue of corruption to the spotlight.
And, I have no doubt that people of India will compel the political class to create more such independent and competent agencies. After all, it is these agencies which will be the saviors of India.

True.. but rather than having more such agencies which will add to the lacuna already existing in the system, we should rather make CBI more powerful and independent. We don't need a lokpal if these systems & institutions are made independent with a check on each other's effectiveness.

The CAG doesn't get enough limelight. The Indian Media contributes to this partly, it is also responsible for behaving irresponsibly, A story which is run 12 hours a day continuously, will not be followed up to the end when they get another 'sensational' story. The media sensationalizes even a small statement of the Congress Dynastic heir Mr. Gandhi when at the same time, a press conference by the president of India's main opposition party gets the blessed & prized left bottom column of 3rd page in a newspaper.
In 2014 general elections, most people wouldn't support UPA or its coalition partners, but whether they would bring the NDA & allies to power is still a question worth asking? I would bet my two cents on Congress still in power after 2014 gen. elec. and CAG's wings clipped to a very vast extent, or for that matter even Right to Information act being altered. Omnishambles.

They are a serious disappointment to me. The investigative / analytical / educative value is very low. Besides, most of the TV channels tax my eyes with the dazzle of fast-changing frames, while my ears get blasted by highly shrill anchors and discussants - all talk at the same time.

CAG has generally been a better run organization.You are right about Mr Rai.He has transformed it as a pro active and more visible organization.CAG along with EC & SC are doing great service to the nation in these times of crisis of character.Instead of encouraging them, many are objecting to them for having grabbed extra constitutional authority.All rants of corrupt and incompetent men and women.Vinod Rai is right about some officers and ministers questioning his approach about performance.Those who want to perform will have to go out of their ways to do so.Those who want to sit tight on files can go on blaming CAG.
CAG's performance is worth comparing with that of CBI, another so called independent organization.It operates as the hand maiden of the rulers of the day.Why don't they learn things from CAG or SC or EC? Time they did.

1.In India the vast majority of corruption is transactional a bribe to get your driving license,property registration etc etc therefore it shows up high on the TI 'perception index' of corruption.

2.At the higher systemic level it is actually less corrupt that many of the countries in the West.There is no wholesale hijacking of political institutions by big business of the sort you see in the US.

3.Vinod Rai has repeatedly exceeded his brief.The role of the CAG is to figure out if funds have been misallocated or stolen it is NOT his job to comment on GOVERNMENT POLICY.

Take the supposed 2G Scam.The entire figure is NOTIONAL the theoretical INR 100,000 crore + scam is money that never existed never changed hands.If the government had actually sold licenses at this theoretical price mobile phones would be unaffordable to the vast majority of Indians instead of the cheapest call rates on the planet that Indians currently enjoy.

This was GOVERNMENT POLICY it is none of CAG's business if the government decides to cell spectrum cheaply to facilitate mass adoption of mobile telephony.

The same can be said about a lot of his other 'scams'.

He has had a debilitating effect on the Government machinery which has lead to decision paralysis.The facts on the ground are if you do nothing when you are a Secretary of a department by constantly delaying decision making then nothing will happen to you.If however you do take a decision then years later(when you are retired) the CAG may produce some theoretical scenario with the benefit of hindsight in which something better could have been done and trump up charges of 'theoretical losses to the exchequer' and move to prosecute you.

No sane person should be expected to take a decision in this scenario and no one is taking any decisions in government these days.

This is what Vinod Rai has done,a callous misuse of his constitutional office and status.

That is very harsh on a man who has stuck his neck out.There can't be any thing NOTIONAL about a govt property that is to be sold in an open auction.If there was so much of "notionality" why did Raja and his bosses and babus did not do open auction of 2G Spectrum? Mr Rai may be off the mark about the final amount.That does not absolve Raja & Co of the crime they indulged in.
Remember T N Sheshan? he also exceeded his brief like Mr Rai.Since then Election Commission has acquired that extra teeth.let there be many more to exceed their briefs for the benefits of the country.

Well, the new reserve price set by the government for the fresh auction of 2G spectrum just proves the CAG mathematics right. I bet now the government is not thinking of cheap mobile telephony.
Moreover, the CAG arguments at the time were not so much on policy, as much as on the manner of allocating the spectrum, which ensured that only the preferred firms got the airwaves.

But every one presumes, including the CAG, that government policies will be based on common sense and preserving, may be increasing, government revenue.

We saw that within a few weeks of the grant of 2G licences, the chosen few firms, 'on-sold' them at huge profits. So, the 'policy' could not have been sound in the first place.

In any case, it is not easy to separate 'policy' from wasteful and incompetent financial deals. Therefore, if an exception is made on the grounds of policy, CAG will have very little to comment upon.

In the 2G case, CAG was entitled to take into account,

a) the dubious manner in which the procedure for granting of 2G licences were clearly manipulated - you may know the details and

b) to whom the licences were granted - only one of the firms had as its core business, mobile telephonery - one or two firms were registered only a few weeks prior to the grant as 'joint stock companies and to keep the list short

c) the immediate after-math of the grant - the huge profits made by these 'micky mouse' firms on selling the licences

"The entire figure is NOTIONAL the theoretical INR 100,000 crore + scam is money that never existed never changed hands"
Isn't that the core of the case? Money that the government could have earned, but left on the table, thereby causing a loss to the exchequer.
"If the government had actually sold licenses at this theoretical price mobile phones would be unaffordable to the vast majority of Indians"
But the initial licensees promptly resold the licenses at huge profits - where, then, is the benefit to ordinary Indians?
This government's right-wing opposition may be distasteful to many, but narrow irritability on its behalf, of the kind you show here, does it no favours

The re-selling of license is a red herring floated by the CAG! I read Sec 5 of the CAG report and found the "re-selling of spectrum" argument seriously flawed. What happened was, Unitech sought and obtained Rs.6000Cr FDI from Telenor. The CAG report says "All that Unitech brought to the table was spectrum. Hence the Rs. 6000 Cr can be considered the value of the spectrum. And Unitech re-sold its spectrum to Telenor". This is clearly a specious argument.

Unitech brought one more thing to the table - access to the Indian market! As per GoI rules, 100% FDI is not permitted in telecom in India. An Indian partner is essential. And elementary knowledge of how investments work will show you that the Rs.6000Cr that Telenor invested in the JV was because of the size of this Indian telecom market.

This one specious reasoning in the 2G report made me realize that the CAG is not above board. While he is fighting a good cruasde against crony capitalism, such crooked reasoning harms his reputation and credibility.

What you call a "caste system" is merely tribalism. Indians only pretentiously labeled it a "caste system" during the British Raj period, in order to ape their British masters, who continually boasted of their feudal system and elite pedigrees.
Just as polytheism is merely the result of cacophony of different beliefs, likewise the so-called "castes" are merely the prevalence of tribal ethnicities. There is no "system" to either of these phenomena - no orchestration nor organization underlying them.
It's like claiming there's a "system" generating divorces around the world. Only malcontents intent on pursuing class warfare politics, liberation theologists, and divide-and-rule foreigners assert these paranoid fantasies.

I am not an apologist of Caste System. But I am surprised that Westerners point out that Caste System as the primary root cause for anything going wrong in Indian socio-economic arena. Most of them lack any idea of the way, Caste system functions in present day India. Most of references regarding Caste system describes it as "Yet another Oriental evil practice".

The fact remains that so-called "caste" is not the result of any "system", or any organized conspiracy. It's merely tribalism, and the product of village lifestyle and natural economic stratification. Same thing exists in Japan, Africa and elsewhere. After all, "Hindu" isn't even a word coined by locals, it's a label coined by the Arabs. It's merely the politics of class warfare which have accentuated "caste" divides.

It's only that during the period of British rule, Indians wanted to ape their British masters. The Brits always boasted of their pedigrees, and of their feudal system. The ever-pretentious Indians wanted to sound similarly pedigreed, so they then invented the english phrase "caste system" to describe themselves, wanting to elevate petty tribalism into something grander. India historically had no uniting Queen or King to impose a grand hierarchy or "system" on everyone. Don't blame Asoka, because he was a Buddhist.

India doesn't have a single unifying language, doesn't have a single unifying deity, never had a single unifying ruler before the British. It's always been just a big hodge-podge. It's only under the British that these broad phrases like "caste system" came into prevalence.

There are tribes in India just like there are tribes in Africa. If Africa is brought under a unified administration tomorrow, will someone suddenly declare in revisionist fashion that all the tribes were originally created through some over-arching "system"?

For those who claim "caste" is all-powerful, then who was the all-powerful originator of this "system"? Can you even give me a name? There is no "Hindu Mohammed", or "Hindu Jesus", or "Hindu Abraham" who could have imposed a grand edict. If that were the case, then his name would be very well known. The mythology around "caste" and its nature have merely been added to the rest of Indian mythology, and out of sheer inertia nobody has bothered to even question it.

The caste system is indefensible - But it may not be such a problem as you suggest - and eventually the solution is always going to be in education and urbanisation.
But the other day at a moment of boredom, I wondered through the pages of The Independent. and flicked through the Past issues of the Economist.
I was taken aback - Ronni Reagan actually insinuated that the blacks were inferior people. His inheritor George W Bush won his elections by extracting money from the really wealthy - The military suppliers, and The Pharmaceuticals.
Did his policies skew towards these Industries?
Well now we know - Yes they did.
Is this legalised corruption? It certainly has a smell to it. The difference is that in the East ( which includes China) there is no standardised format.
Then my eyes wondered towards the East of the USA. In my dreams along came Arthur Scargill - A great man of the people with a very limited vision. I have started understanding that the UK government nationalised all the coal mines because of people like A.Scargill with a very limited vision. A vision that could not go beyond him and his mates having a job with a cushy pension.
I had to ask myself - Is this nationalisation with all it's consequences, a legalised form of corruption??
I now stand around in parties, with no words on my tongue - desperately and thoroughly confused.
The question that keeps on arising is - Why did the Britishers fail at their job? Why did they not become inclusive as the Romans once were ? Why did they not introduce universal education into India.... Then we could have legalised corruption !@ My horse for legalised corruption !!!

So-called "world's largest democracy" is really the world's largest kleptocracy. Or more aptly, a "Mubarak-racy", given the ruling clique's penchant for branding any and all opponents as religious fundamentalists, as a pretext for frightening the population into rallying around them.